Save Article

Mexico Defends Carrier Rates
In the Face of MCI Threats

Dow Jones Newswires

Updated Feb. 9, 1998 12:01 a.m. ET

MEXICO CITY -- Faced with threats that
MCI Communications Corp.
will halt investment in Mexico unless the country opens its telecommunications market, a top Mexican regulator Friday denied accusations that the country's long-distance telephone market is anticompetitive.

Carlos Casasus Lopez, president of Mexico's Federal Telecommunications Commission, repeated the government's position that rates for completing international calls to Mexico should be lowered more slowly than U.S. carriers demand.

He also demanded that
Telefonos de Mexico SA
be allowed to begin operations in the United States despite objections by
AT&T Corp.
and MCI.

Mr. Casasus spoke at a news conference after MCI threatened to halt its $1.8 billion investment program in Mexico unless key demands were met. MCI and Mexican financial-services company Banacci have already spent $900 million on their Mexican long-distance joint venture, Avantel SA.

"MCI knows how to compete, but we cannot do so against a heavily subsidized Telmex, whose strategy of open discrimination and anti-competitive abuse has been tolerated for far too long," MCI Chairman Gerald Taylor wrote in a Jan. 28 letter to William Kennard, chairman of the U.S. Federal Communications Commission.

Mr. Casasus defended Mexico's tariff structure, which requires long-distance carriers to pay a substantial amount for use of Telmex's local network.

"In every country, long-distance has subsidized local service, and we're all trying to find ways to eliminate this," he said. "But the flows are so large that they can't be eliminated from one day to the next."

In addition, the Mexican Federal Telecommunications Commission president appeared unfazed by MCI's threat to halt investments. "I'm going to make a threat, too, that Carlos Casasus won't invest $10 million in the United States," he said.